Uber Loses Top Court Fight as EU Judges Take Aim at Gig Economy

Uber Loses Top Court Fight as EU Judges Take Aim at Gig Economy

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Uber suffered a defeat after the European Union’s top court ruled its ride-hailing service should be regulated as a transport company, a decision that could set a precedent for the burgeoning gig economy, according to Bloomberg.

The EU’s Court of Justice said that the world’s most valuable startup should be regulated as a transport service when drivers aren’t professionals and they are using their own vehicles. The company says most of its products are already covered by such regulations. The decision, which can’t be appealed, clarifies for the first time that connecting people via an application to non-professional drivers forms an integral part of a transport service. It rejects Uber’s view that such services are purely digital.

“The service provided by Uber connecting individuals with non-professional drivers is covered by services in the field of transport,” the EU Court of Justice in Luxembourg said. EU nations “can therefore regulate the conditions for providing that service.” Uber has argued that it’s a technology platform connecting passengers with independent drivers, not a transportation company subject to the same rules as taxi services. It’s the first ruling by the bloc’s court on how an app such as Uber should be qualified and it has been closely watched by the technology industry because of its precedent for how firms in the gig economy ought to be regulated across the 28-nation bloc.

“This ruling will not change things in most EU countries where we already operate under transportation law,” Uber said in a statement. “However, millions of Europeans are still prevented from using apps like ours. As our new CEO has said, it is appropriate to regulate services such as Uber and so we will continue the dialog with cities across Europe,” said Uber. The case centers around UberPop, an inexpensive ride-hailing service in several European cities that allowed drivers without a taxi license to use their own cars to pick up passengers. Legal challenges have forced Uber to shutter UberPop in most major European countries in favor of UberX, which requires drivers to get a license.

“We regret the judgment effectively threatens the application of harmonized EU rules to online intermediaries,” said Jakob Kucharczyk, of the Computer & Communications Industry Association, which speaks for companies like Uber, Amazon, Google and Facebook. “The purpose of those rules is to make sure online innovators can achieve greater scalability and competitiveness in the EU, unfettered from undue national restrictions,” he said. “After today’s judgment innovators will increasingly be subject to divergent national and sectoral rules. This is a blow to the EU’s ambition of building an integrated digital single market.”

Uber isn’t the only business model being questioned by policymakers. In Paris, regulators are clamping down on Airbnb, whose home-rental service has drawn complaints from hotels that are subject to a different batch of rules. Deliveroo, the food-delivery service, is also facing scrutiny over its treatment of workers in the U.K. and elsewhere. Europe is taking a stricter approach to regulating American tech giants. Yesterday, regulators in Germany accused Facebook of violating antitrust laws by using data it collects on users, while France’s top privacy regulator told WhatsApp to stop sharing user data from the app with Facebook, which bought the messaging service in 2014. The European Commission has also levied billions of dollars in collective fines against Apple, Google and Amazon over unfair business practices.

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